 "Within hours of peaking at an all-time high of $69,192 on Tuesday, Bitcoin crashed to $63,591 Wednesday morning. This was mainly driven by the fact that a massive number of traders and amateur investors decided to cash in by selling off their digital")
Bitcoin reached a new all-time high for the first time in over two years before experiencing a rapid decline as traders decided to cash in some profits. However, just hours after peaking at $69,191.95 in the US on Tuesday the digital asset saw a massive sell-off, which caused it to drop to around $63,591 as of 9:57 AM Wednesday, India.
These price fluctuations highlight Bitcoin’s volatile nature. Factors such as inflows into US-spot Bitcoin exchange-traded funds, a potential decrease in the token’s supply growth, and speculative bets in derivatives markets have contributed to this year’s remarkable rally. However, this surge has left investor positions stretched, raising concerns about a potential pullback.
“I expect we’ll likely see some range-trading take place for a few days at least, with Bitcoin prices continuing to chop around in the $60,000 range,” said Stefan von Haenisch, head of trading at OSL SG Pte in Singapore.
According to data from Coinglass, over the past 24 hours, approximately $880 million worth of bullish crypto bets and $265 million of bearish bets were liquidated in derivatives markets. This combined figure of over $1 billion marks the highest since the pandemic-induced bull run in digital assets, as noted by von Haenisch.
Despite the recent dip, Bitcoin has surged by 50 per cent so far in 2024, outpacing gains in global stocks, which has bolstered optimism in the digital asset market. The top 100 tokens have also seen an increase of more than 40 per cent over the same period.
Impact Shorts
More ShortsIn addition to Bitcoin’s price movement, gold hit a record high on Tuesday, surpassing $2,100 per ounce. This rally was driven by growing expectations for a US interest rate cut in June.
“Cryptocurrencies are now being used as an alternative to using gold when markets are looking to hedge against increased risks and higher interest rates,” said Stuart Cole, chief economist at Equiti Capital. “So, it’s no surprise that when you see the gold price rallying, cryptos are doing the same.”
Analysts attribute Bitcoin’s recent performance partly to the upcoming halving event in April, which occurs every four years and reduces the rate at which new tokens are released, along with the rewards for miners. With the supply of Bitcoin limited to 21 million, and 19 million already mined, scarcity continues to be a driving factor in its value.
Despite its popularity, Bitcoin remains too volatile for many investors, lacking sufficient real-world applications beyond speculation. However, some companies are adding crypto assets to their portfolios, with MicroStrategy and Reddit among those making recent purchases.
Additionally, the market for stablecoins, such as Tether, has seen significant growth, with the issuance of dollar-pegged stablecoins surpassing $100 billion for the first time.
Meanwhile, the price of Ether, the second-largest cryptocurrency, has yet to reach its previous record high, currently trading at $3,486. Crypto stocks saw declines on Tuesday, with shares in Coinbase, Riot Platforms, and Marathon Digital trading lower.